Share this article:

01 September 2013 9:15 AM

AS one of the world's slowest readers, I finished Alwyn W. Turner's latest book A Classless Society: Britain in the 1990s, (Aurum; £25) - despite having had a copy for two weeks - just as a not-universally-admired Tory Prime Minister lost a key vote in the House of Commons, partly through a revolt of his own backbenchers.

What goes round, eh?

Maybe. Before I go any further, I'd better say I am writing a proper review of A Classless Society for Lobster magazine, and when it is published I shall post a link. This is more of a personal response to what is a tremendous book.

At some point during the Nineties, my wife and I popped into a convenience store in London to buy a few of life's essentials (cigarettes, drink, newspapers, milk etc) and I chortled at the boast engraved on the window: 'Established 1976.'

How reassuring, I sneered, that some things never change, even in this fast-moving world. Wiser, as usual, than I, she pointed out that the shop's foundation year was, in fact, some way back in the past.

Well, the distance between that date and today is of the same order as the gap between that date and the mid-Seventies, which means that one of the first things to say about Mr Turner's subject-period is that it is now quite a long time ago. Somebody born the month John Major succeeded Margaret Thatcher would now be planning their 23rd birthday celebrations. I was in the same position at the start of Mrs Thatcher's battle with the miners with regard to the (pre-Profumo Affair) government of Harold Macmillan complete with Chancellor Selwyn Lloyd.

Who he? Exactly.

So let's recap the early Nineties: no WiFi, no BlackBerry, no smoking ban and, for most people, no computers able to do anything much more than word processing. A few sophisticates (including, I believe, the Duke of Edinburgh) had e-mail. Most of us did not. Usage of public telephone boxes was at peak levels, British Rail was still in business and not only was London Underground not obliged to offer wheelchair access, but an old by-law actually banned said wheelchairs from the Tube.

This book takes you there, and reminds you of the taste and feel of those times and of the Nineties in total. I am not going to cannibalise my review, but it is no secret that Mr Turner is very good also on the dominant political figure of Nineties Britain, John Major (now Sir John). His successor, Tony Blair, was much more a man of the Noughties, scene of both his triumphs (Sierra Leone, the second election landslide in 2001, the initial response to the September 11 attacks) and his tragedies (Iraq, the Kelly affair).

Reading A Classless Society confirms my own prejudice that the Nineties and the Noughties are very much a re-run of the Fifties and Sixties, but with The Beatles and The Rolling Stones emerging at the same time as new British cinema and kitchen-sink drama, i.e. in the Fifties, rather than, as was actually the case, a few years later.

Thus a major world conflict came to an end in 1945/1985 with the defeat of Hitler/the election of Gorbachev, a post-conflict mini-boom marked by a love of all things American, by double-breasted suits for men and a big-shouldered new-look for women and by the big band sound/rap music was swiftly succeeded by a hugely-unpopular official squeeze designed to drive down consumption and build an export-led economy (rationing and austerity then, Sterling's membership of the European Exchange-rate Mechanism in the early Nineties).

Both the Fifties and the Nineties ended very differently from the way they had started. In both cases, a grim first few years suggested a return to the crisis years of the past (the Thirties then, the Seventies and early Eighties in the latter decade). In both cases, such comparisons (of which I myself was guilty as a journalist on The Guardian in the Nineties) were wrong.

In both cases, the third and fourth years of the decade marked a surprising brightening of the economic circumstances of the average British household and in both cases the decade went out on a high - Macmillan's 'candy-floss summer' of 1959, the Millennium jollities of 1999.

Along with the need to move round some of the cultural furniture in making sense of any comparison of the Fifties and Sixties to the Nineties and the Noughties are the different comparisons of political leadership. With Blair, we ended up with an amalgam of Macmillan and Harold Wilson, i.e. we had a bad (albeit successful) actor with a Scottish surname, an English accent and a talent for taking power during an incipient boom merged with a Labour leader liked and trusted by the professional middle class but considered slippery by the media-political establishment.

But there is no such thing as a free lunch, and having got away with a merged Blair-Macmillan, we have then had to endure not one but two Edward Heaths, with Gordon Brown representing the 1970-1974 Prime Minister's resentful and awkward side and David Cameron his doomed attempts to replicate a successful Labour leader.

Someone once said that every head of the BBC will be worse than the last, and, returning to where I began, with a comparison of Major and Cameron, it is hard not to feel the same way about Prime Ministers. Lots of us (myself included) said beastly things about Major but nobody assumed he was a phoney.

The inauthenticity of David Cameron, however, is painful. When he gives one of his 'family friendly' speeches mentioning 'mums' and 'kids', one imagines his being briefed by advisors that these are the terms used by the lower class when referring to mothers and children.

Indeed, nothing he does seems believable. Photographed at the seaside, he gives rise to the suspicion that he dislikes the sea. Ditto drinking a pint of beer, sitting in a cafe with his wife or pretty much any other activity you care to mention.

For this, of course, we have to thank Major's successor and central figure of the latter part of this book, Tony Blair.

Mr Turner winds up his narrative at the time of Blair's second landslide, in June 2001. This is absolutely the right call, especially as he eschews any suggestion that presentiment hung in the air, that the cataclysmic events of that autumn were dimly foreseeable or any similar retrospective crystal-ball gazing.

He hints that the decade that followed the summer of 2001 is of less interest to him. Well, fair enough, although given that it involved Britain in two wars, put the City at the epicentre of a global financial crisis and ushered in the first formal Coalition Government since the war, you have to wonder whether Mr Turner will be able to resist writing about it.

No, I don't think so either.

In the meantime, this book proves beyond doubt that the Nineties were a very important decade. One day, there will be lots of books about this period.

I suspect that the first may well be the best.

Going South: Why Britain Will Have A Third World Economy By 2014, by Larry Elliott and Dan Atkinson is published by Palgrave Macmillan

Share this article:

24 August 2013 1:24 PM

I was on LBC last night, talking about the revised growth figures published earlier in the day. No-one likes to be a dog in the manger (I don't, at any rate) but I did urge listeners to be cautious about any claims that our economic injuries are healing fast.

Yes, the second-quarter growth figure was revised up from 0.6 per cent to 0.7 per cent but gross domestic product is still more than three per cent below its pre-crisis peak.

Furthermore, even with the upward revision, the year-on-year rate is a miserable 1.5 per cent, well below the two per cent minimum thought necessary to stave off unemployment, there being roughly a two per cent annual rise in productivity.

City analysts have raised their growth forecasts a little - a month ago the average estimate was for one per cent this year and 1.7 per cent next year. Now they have growth at 1.2 per cent this year and 1.9 per cent next year.

Still below the magic two per cent, in other words. And economies exist not for their own sake but for the benefit of the people they serve. As I pointed out in an economic bulletin I was writing earlier this week, earnings growth continues to lag significantly behind price rises.

Four words tell the tale: we are getting poorer.

1) Put out the flags?

THE fact that those growth numbers were helped by a better than expected foreign trade performance triggered talk in some quarters that the great rebalancing of our economy away from consumption and towards manufacturing and exports,

A little reality check is in order. The balance of payments has not been in surplus since Michael Foot's Labour Party was scythed down at the polls by Margaret Thatcher's Tories, Michael Jackson's Thriller album was flying off the shelves (for reasons that have always baffled me) and Michael Caine and Julie Walters were lauded for their performances in the film version of Educating Rita.

Don't bother running these nuggets through Google - it was 1983.

What we are talking about here is a culture of low expectations. We manage to sell some products abroad and suddenly we are the new Germany. We managed to host an athletics competition last year and suddenly all our problems were over, we had rediscovered our pride and shown the world what we could do.

There was a time before league tables when a school friend came across our normally-equable head of English in a despondent mood. It was a boys' school, so staff members' daughters went to the local girls' grammar. My friend enquired as to the cause of the master's gloom, to be told that he, the master, was heartily fed up with the school putting out the flags whenever it managed to achieve A-level results that would be routine and unexceptional at the establishment attended by his daughter.

It seems the whole country has now developed the same condition.

2) You've come a long way (sort of)

I have been working in Victoria this week and was quite taken aback by how corporate and spruced up it has become, with shiny glass office blocks and the constant roar of redevelopment. As with many a Sussex kid, Victoria was my gateway to London and as a teenager I vaguely imagined that, with Buckingham Palace round the corner and the Catholic cathedral right by the station, this was a smart part of Town.

By the time I realised that not only were there far smarter parts (Kensington, or Mayfair, for example) but also that Victoria was actually quite scruffy and seedy I was quite fond of it for what it was. I remember in the very early Eighties a buffet on the station called The Downs, the first establishment that I can recall with a total smoking ban, although this was largely ignored. Across from the station was a place called (I think) The Great British Disaster Restaurant (no, I've no idea why either).

There remains, by an entrance to the Tube station, a relic of the old days, a cafe with Formica tables and clouds of steam billowing from behind the counter.

But for how much longer?

3) The day before yesterday

AS expected, I am enjoying enormously Alwyn W. Turner's new book A Classless Society: Britain in the 1990s (Aurum; £25). It is a tribute to the author that I will occasionally find myself recalling what I was up to at the time. For me, the decade really kicked off in March 1990, when - there being no-one else available - I was dispatched by The Guardian to cover a G7 finance ministers' meeting in Paris. The communique was in French with no English version in sight. As I subjected the document to my schoolboy French, Chris Huhne, who was there for The Independent, sportingly helped with the translation.

On my return to London, my taxi driver gave me a blow by blow account of the Poll Tax riot that had rocked the capital while I had been swanning round in the city of light. My colleague Larry Elliott had been quite sympathetic to the protestors until he learned they had smashed the windows of Cafe Pelican off Trafalgar Square, after which he insisted that only the sternest measures would suffice.

Thanks again for reading and enjoy the weekend.

dan.atkinson@live.co.uk

Going South: Why Britain Will Have A Third World Economy By 2014, by Larry Elliott and Dan Atkinson is published by Palgrave Macmillan

Share this article:

17 August 2013 11:57 AM

THERE'S a (probably) apocryphal story that the business page of one newspaper greeted the 1938 Munich agreement with the headline: 'Shares fall on peace fears.' Not quite as perverse as it sounds given the big beasts of the stock market in those days included the likes of Vickers Armstrong, a major player in the world of armaments.

But what are we to make of last week, when 'fears' of a US recovery sent shares skidding? American jobs data and inflation rate pointed to an upswing across the Atlantic, and markets fell out of bed.

What is going on?

Simply this. The better the US (and British) economies perform, the sooner the powerful 'quantitative easing' drug will be taken away. This is the process whereby central banks create money out of thin air and use it to buy assets, usually the bonds issued by that country's government (convenient, huh?).

In our case, £375 billion of this new money has been created. Now the fear is that this massive stimulus is the only thing keeping the economy afloat and that any signs of a recovery mean the prescription will be cancelled.

If this sounds ludicrously the wrong way round, that is because it is. Trevor Williams, senior economist at Lloyds Bank Commercial, sounded a note of sanity. 'It is a little strange for investors to treat good news in this way. After all, economic recovery is what these stimulus programmes are for.'

Unless, of course, they are taking the view that the medicine and the recovery are tightly meshed together and that the 'recovery' is really nothing of the sort, merely a reaction to a massive stimulus. Maybe those clattering share prices are trying to tell us something.

1) Now we are ninety

ALWYN W. Turner's new book A Classless Society: Britain in the Nineties (Aurum; £25) is due to be published during the next few days. I caught up with the great man in London yesterday and took delivery of a copy. What a treat it promises to be.

I shall give you a full report when I have finished reading it, but one thing that struck me just browsing the photographs is how memory plays tricks. I could have sworn that The Darling Buds of May aired in the Eighties and that David Mellor's family line up, staged to show wife and children standing by him after a bout of amnesia concerning his marriage vows, was also an event of the previous decade.

Conversely, I had, until recently, always thought of Inspector Morse as the quintessential early Nineties television programme, beautifully filmed, well acted cerebral entertainment for those rather grim days at the start of the decade. Not true: the first series aired in January 1987 and the last in summer 1992, although there were some 'specials' later.

2) The way they were

AT the front of A Classless Society is a photograph of an impossibly-youthful John Major on his soapbox during the 1992 election, surrounded by supporters and opponents, at the back is a picture of a solitary Tony Blair on his campaign aircraft. The contrast is striking and had me thinking how traditional a figure was Major in contrast with what was to come.

I worked on a national newspaper at the time and followed current affairs quite closely, but I had no idea what television programmes he watched, nor see staged photos of him 'doing the school run'. I do not recall Major pretending to play computer games or to like the Arctic Monkeys (OK, Gordon Brown was apparently misquoted on this last point) or to follow keenly television talent shows.

From memory, here's what we knew. He was a cricket fanatic (as Attlee had been before him), he read Trollope, was interested in classical music and enjoyed gardening. That's it.

What a dignified contrast to the plausible young men who came after, the career politicians desperate to show their non-existent ordinariness with clunking references to football and popular culture. As the great lady said, you don't know what you've got 'til it's gone.

3) A pleasant (if hazy) memory

THE notion with which I started this post, that of a patient becoming over-fond of the medicine, reminded me a visit to the school medical officer when I was 15 to complain of a string of bad dreams that were giving me sleepless nights. This was obviously a little more interesting than the usual run of sports injuries and blatant attempts to get off games or lessons, and after consulting a pharmacopeia he prescribed some tablets, the name of which I cannot remember.

Somehow I worked out that were I to save up a week's-worth and take them all at once, I would experience a very, uh, pleasant feeling. Get high as a kite, in other words. Happy days/daze. I won't say it was a long time ago, but the Prime Minister's first name was Leonard, he had replaced a Prime Minister whose first name was James and the American president had been born Leslie Lynch King.

Trivia - don't you love it?

Thanks again for reading and enjoy the weekend.

dan.atkinson@live.co.uk

Going South: Why Britain Will Have A Third World Economy By 2014, by Larry Elliott and Dan Atkinson is published by Palgrave Macmillan

Share this article:

09 August 2013 10:14 PM

BE careful what you wish for. Ever since Britain's calamitous 1990-1992 membership of the European Exchange-rate Mechanism (ERM), I have soldiered away in the good cause of insisting that control of inflation ought not to constitute the be-all and end-all of monetary policy.

And now what has happened? After precisely 20 years of inflation targeting, new Bank of England Governor Mark Carney has conjured up a second objective, the reduction of unemployment to seven per cent or less of the available workforce.

What's wrong with that?

OK, well here are three points to be made.

One, the unemployment target is officially of less importance than the two per cent inflation target. Officially, but not really. We all know the inflation target went by the board years ago. Ministerial-sanctioned dishonesty in terms of the 'real' target cannot be a good thing.

Two, how does immigration affect this new goal of central banking? After all, if the workforce gets bigger, then, providing jobs are being created, the percentage unemployed gets smaller.

Three, the current 'strategy' of getting monetary policy to 'do the heavy lifting' seems highly questionable. Is the central bank really the right agency for achieving every economic goal? There's an old saying about a jack of all trades being a master of none.

1) Tapping the barometer

THE general chorus of approval for Mr Carney's debut is part of a wider mood of cheeriness about our economic prospects. As I noted last week, this may be entirely justified, assuming we are experiencing a re-run of the early Thirties, when a slow but sure recovery was under way, but would look rather less clever were we to be in the middle of a repeat of the events of 40 years ago, when an apparent upswing went horribly wrong with the Arab-Israeli war of October 1973.

Or rather, when the autumn Middle East conflict and the subsequent squeeze on oil supplies caught the west at just the wrong time, when a massive economic stimulus left it horribly vulnerable to price shocks.

Sound familiar?

Nobody actually knows whether or not a similar storm is just below the horizon. But it would be nice to think someone was watching the glass.

2) You're having a laugh

TUESDAY'S edition of The Daily Telegraph was perhaps even more thought-provoking than usual. I'm a big fan of the paper, although I have never worked there in my chequered career (perhaps that 'although' ought to have been a 'because').

There was the item suggesting it was female viewers who persuaded the BBC that a woman ought not to become the new Doctor Who. I recall picking up a newspaper at the hovercraft terminal in Dover ahead of a Channel crossing and learning that the next Doctor Who 'could be a woman'. That was summer 1978.

Some stories remain evergreen, it seems.

Then there was the report that Jeff Bezos, founder of the Amazon retail group, had bought The Washington Post newspaper for $250 million. The story quite rightly contrasted the venerable title's purchase price with the $1 billion paid by Facebook for Instagram, 'the on-line photo-sharing service'.

Yep, well I guess it's not so much that the Washpost is undervalued as that Instagram is grotesquely overvalued (as is Facebook, probably).

On the obituaries page, it was goodbye to Admiral Sandy Woodward, commander of the South Atlantic Task Force in 1982. The piece ended by noting that he was separated from his wife 'and since 1993 his companion has been Winifred "Prim" Hoult'.

Sorry? The Admiral's girlfriend was nicknamed Prim?

On the same page was an obituary for Dominick Harrod, former economics correspondent with the BBC. I too was a CE (to use the French initials used on some accreditation) for well over a decade. It is a small and select breed and the loss of any one of them is always sad. Ask not for whom the bell tolls...

3) Nice idea, shame about the likely outcome

DAVID Cameron's insistence that it is time to reduce the 'cost of politics' in terms of the number and remuneration of legislators could have a lot of appeal. The trouble is, I don't see it is really connected to a wider view of the world, to any set of beliefs. It is rather like one of those dummy switches that cooker manufacturers used to fit in the Fifties to persuade American housewives that they were doing something rather more skilled than heating up ready-meals.

Were it only I who thought this, he would not have a problem. But I don't think I am alone.

4) Fatuous officialese: two corkers

Exhibit one: from the Treasury

'Our tax system should be efficient and fair. It should reward work and support aspiration.'

As opposed, presumably, to being inefficient, inequitable and rewarding sloth?

Exhibit two: from the Army

'The Yorkshire Regiment is a tough, forward looking and thinking Infantry Regiment that delivers excellence in all that it does.'

As opposed to an ineffectual, hidebound and brain-dead outfit that delivers nothing but abject mediocrity?

5) Bye bye Beck.

HOW sad a week ago to bid farewell to Radio 4's excellent adaptation of The Martin Beck Killings, the detective stories of husband and wife team Maj Sjowall and Per Wahloo set in Sweden in the Sixties and Seventies. The top three sleuths were played by three marvellous actors, Steven Mackintosh as Beck, Neil Pearson as his sidekick Kollberg and as no-nonsense copper Larsson we had Ralph Ineson, who played the boorish but apparently-unsackable salesman Chris Finch in The Office.

The final episode, The Terrorists, was set in 1974, ten years after the first. It ended on a Friday in January 1975, with Beck and his girlfriend and Kollberg and his wife enjoying 'just the kind of evening everyone hopes for more of, the kind of evening when everyone has eaten and drunk well and knows that they are free the next day'.

Here's to it.

Thanks again for reading and enjoy the weekend.

dan.atkinson@live.co.uk

Going South: Why Britain Will Have A Third World Economy By 2014, by Larry Elliott and Dan Atkinson is published by Palgrave Macmillan

Share this article:

03 August 2013 12:43 AM

MY, everyone seems cheery all of a sudden. Apparently, the economy has turned the corner and good times are not too far away. It seems that, in the words of that well-known economic commentator, the late John Peel, there has been a 'hard grey winter' but now: 'It will be a long and ecstatic summer.'

Yes, maybe. It seems to me that the big question is which year we are in, historically speaking. So if this is 1933, the auguries are pretty good. Earnings and the general mood were both downbeat, but beneath the surface a range of new industries - nylon, rayon, bakelite, radio, motor manufacture, new alloys - were taking root in communities away from the old industrial heartlands. By 1934, it seemed that a half-decent recovery was under way, which had the happy side effect of dishing the chances of the British fascist movement.

But suppose this is 1973, a year the first half of which looked like blue skies all the way after the turmoil that had followed the break-up of the world monetary system in the late Sixties and early Seventies? Days lost through strikes in Britain fell markedly and economic growth motored ahead in the first quarter at a staggering 5.3 per cent compared with the last quarter of 1972.

To put that in context, quarter-on-quarter growth the same time a year earlier had been 0.2 per cent, and the year before that minus 0.9 per cent. In 1970, first quarter growth compared with the previous quarter had been minus 0.8 per cent.

In retrospect, 1973 was a fool's paradise in which a gigantic economic stimulus delivered by western governments - sound familiar? - had put us all on steroids. In this climate, even white-ruled Rhodesia, target of allegedly-tough international sanctions, clocked up impressive growth rates.

What we didn't then call a 'black swan event' or an 'unknown unknown' - the October 1973 Arab-Israeli war - capsized this short-lived recovery. A good thing there are no comparable international flashpoints today. Apart from North and South Korea. Oh, and Egypt. Um, yeah and Syria. And Iran. And...

While we're talking about years, the Peel quote is from 1968, the sleeve notes for the first Tyrannosaurus Rex album. But then, you knew that.

1) His name is...

I'VE only just caught up with Half Moon Street, a thriller starring Michael Caine and Sigourney Weaver. It's been sitting on my DVD pile for yonks but I'd always sort-of assumed the title was supposed to conjure up vague images of Chinatown, whether in London, New York or anywhere else.

Without being too PC, I get a little tired of all this 'hello, grasshopper' stuff - I found the Michael Cimino film Year of the Dragon really rather...I won't say 'offensive', but you feel free.

Anyway, it turned out that I could not have been more wrong. Not only is Half Moon Street not in some real or fictional Chinese quarter, not only is it a real street running off Piccadilly in London, but it is one I know well. In the days when I had acccess to the middle-class fairy gold of an expense account, I would sometimes lunch contacts at the Boudin Blanc in Mayfair, and Half Moon Street was on my way.

The film was made and set in 1986, which puts it at a turning point in British social and economic history. Thus the grotty Ladbroke Grove bedsit in which lives Weaver (an American academic holding down a poorly paid think-tank job in the Smoke) clearly belongs to the grim late Seventies and early Eighties, whereas the car-phone belonging to Caine (a British peer involved in Middle East peace talks) and the general consumer gadgetry tells of the affluent decades to come, that would last right up to the 2007-2008 crisis..

In some ways it isn't really a very good film. Weaver's pay is so lousy that she responds to a video sent by - whom? - detailing the earnings available to an escort girl. She embarks on this parallel career, hence meets Caine. On her first 'date' (with another client) she wipes off make-up before leaving her flat, apparently determined to 'be herself'.

You can't help thinking the pass has already been sold in terms of not doing things 'just to please men'.

Furthermore, she speaks in that manner peculiar to grand or highly educated (or both) American women, where most of the vowels come out as a U. Thus we hear sentences such as: 'Muny mun wunt sux without strungs.'

Well, indeed.

It is redeemed, in a way, when the bad guy (whom she thought a friend) tells her he and his confederates sent the video and that, had she not responded, it would not have mattered: 'London is full of girls like you.'

Of course, the scriptwriter could have meant simply that lots of women in the capital would be happy to work as escorts. I prefer to think he or she meant that London is full of middle-class professional women who think they can do escort work without being affected by it - a sad delusion, I'd have thought.

2) You've got to laugh

APRIL Fool's Day, as with Christmas, seems to be getting earlier every year, indeed to have drifted into the previous year. Yesterday's edition of The World at One on Radio Four ended with an hilarious spoof of an earnest discussion about yoof culture. The peg for this piece of comic brilliance was, apparently, the fact that London's South Bank Centre will this weekend be transformed into 'a concrete playground, a celebration of street culture', according to the BBC, although this may have been another part of the spoof. You can listen here - go right to the end of the programme, it's the last item. And it is a spoof, isn't it?

Share this article:

27 July 2013 12:55 PM

MANY moons ago, when working for The Guardian, I ran a story based on the prediction of my old friend Ian Angell, professor at the London School of Economics, that 'off-planet banking', with financial information stored on space satellites, was now a technical possibility and would make offshore banking look distinctly old hat. He was invited on television to discuss it - here is the relevant Youtube link

Fifteen years on, Ian makes contact to say that PayPal - the online payments service - is looking at the idea. PayPal is interested in the notion from a practical, commercial point of view, whereas Ian - Wales's only libertarian conservative - is keener on the idea that off-planet banking will starve the nation state of taxable funds and lead to a drastic shrinking of the scope of government.

In theory, there are various international conventions that declare space to be within the control of terrestrial governments, but how easy will that idea be to enforce?

In his book The New Barbarian Manifesto (Kogan Page; 1999), Ian wrote:

'Soon, under-reporting of taxes will snowball into the total migration off-planet of a state's taxation capacity...Dematerialised e-cash is the ultimate in liquidity. Along with all other information products, it will slip through politicians' grasp. Off-planet commerce will purge itself of the intermediaries who meekly report their audit trails to governments.'

1) Don't come running to us

WITH David Cameron and other world leaders on a mission to close down (or at least substantially reform) tax havens and offshore financial centres, the attractions of off-planet banking can only grow, especially as orbital technology becomes cheaper, along with the gadgetry needed by earth-bound depositors to access their funds.

As with offshore centres, of course, off-planet banking offers huge potential for fraudsters, given the difficulty of verification when one's money is eight miles high. I do hope that any fraud victims will not expect to be compensated by the public authorities. Where do they imagine the compensation will come from other than the despised sucker-taxpayers whom they cheerfully left behind in their fiscal space odyssey?

I fear, however, that, as with the wild-child son or daughter, when it all goes wrong the previously-hateful mummy and daddy/nation state will be expected to pick up the pieces.

2) Credit where it's due

BBC hacks are routinely accused of failing in their questioning ever to put the taxpayers' point of view or even of showing much sign that such a viewpoint exists. This week, however, Today pressed hard over the Government's plan to use £12 billion to underwrite £130 billion of mortgage lending. Why was the Government getting into the mortgage business? Should not the banks be doing this?

Ministers seem to believe that the credit pipeline is abnormally blocked, thus special measures are needed. OK, well if there really is a 'market failure' here (i.e. good lending risks are failing to get the funds that would be available in normal times) and Ministers have to step in, then returns on this lending ought to be above average.

The same goes for investments made by all those venture funds set up by the Business Department using taxpayers' money.

Will we, the taxpayers, enjoy above-average returns? I wouldn't bet on it.

3) You're having a laugh

READING any business story about the digital marketplace is a bizarre experience. At times I can't help thinking someone is making up all these silly names, sillier services and silliest-of-all valuations. Yahoo!, Tumblr, Facebook, Google, Instagram, Flickr, Coo-ee!, Faceache, Bumblr.

OK, I made up those last three. They don't exist. But feel free to offer me $1 billion apiece for them.

4) Boy oh boy

I can't have been the only loyal subject delighted to learn that the latest addition to the Royal family was a boy not a girl. With the change in the law of succession, we'd have been 'treated' to endless witter about 'the girl who will change history'. It would all have been horribly reminiscent of the sort of guff spouted by the fictional 'head of sustainability' Kay Hope (Amelia Bullmore) in the BBC's spoof Olympic documentary series Twenty Twelve: 'Go, women! Go, us!'

Elsewhere, I had to laugh at a headline in The Daily Telegraph announcing: 'Project normal child begins' over a picture of Kate, William and baby George. Normal children don't tend to command an entire page in a broadsheet newspaper, but never mind.

4) My, how times don't change

'Consider this report in an English newspaper: "Princess Margaret travelled last night to Balmoral as an ordinary first-class passenger in the Aberdonian night train out of King's Cross." Now, this is just the sort of thing that convinces foreigners that the English are a quiet, unexceptional people. But why, if nothing exceptional was happening, was it thought worth reporting at all? Why bother with the fact that Princess Margaret got on a train going to Scotland, something hundreds of other English people did that night?'

- David Frost and Antony Jay; To England With Love; Hodder Paperbacks; 1967

Thanks again for reading and enjoy the weekend.

dan.atkinson@live.co.uk

Going South: Why Britain Will Have A Third World Economy by 2014, by Larry Elliott and Dan Atkinson is published by Palgrave Macmillan

Share this article:

20 July 2013 1:31 PM

ACCOUNTING and sport really don't go well together, as demonstrated again this week with the official claim that the 2012 Olympics delivered economic benefits worth £10 billion.

A suspiciously round number, you may think, doubly so when you consider it neatly tops the £9 billion cost - too neatly, in my view.

Vince Cable, a professional economist, declined to give the estimate a ringing endorsement, or indeed much endorsement at all, telling Radio Four: 'It is the best we can do – it is not necessarily something that would pass muster in the best academic journals but a test of credibility has been applied to it.'

One person who has been here before, albeit on a smaller scale, is Claire Short, former Birmingham MP and ex-Cabinet Minister. In the mid-Eighties, Birmingham's city council decided to stage a Formula One race along the lines of the Monaco Grand Prix. Short, along with three other Labour MPs in the city - Roy Hattersley, Jeff Rooker and Terry Davis - opposed the race but pretty much everyone else on the political scene was in favour.

For what happened next, I am indebted to Andy McSmith's excellent book Faces of Labour (Verso; 1996).

'The first two races, in 1986 and 1987, made a combined loss of £1 million, but the third showed a profit of £536,000 in the accounts drawn up by the city council. It emerged, though, that this had been achieved by making an estimate that the race had generated free publicity worth £600,000 and transferring that amount from the council's advertising budget to cover what would otherwise have been a loss.'

Short accused the council of behaving dishonourably. About right, I'd say.

1) Treble plagues on houses all round

WATCHING the current spat between the senior civil service and the Cabinet Office puts me in mind of Henry Kissinger's remark about the Iran-Iraq War: a shame they can't both lose.

The bust-up is over plans by Cabinet Office Minister Francis Maude to allow Ministers more leeway in terms of selecting their advisers, a proposal claimed to put at risk the British tradition of an impartial civil service.

I'm sure Maude is a decent enough fellow: my wife used to work for him during her mis-spent youth as a Whitehall girl, and he is my sister's MP. But I cannot think this is the time to spend taxpayers' money putting politicians' mates on the public payroll.

As for the glories of the civil service, I fear this is yet another aspect of British public life, along with the BBC, the NHS and the police, that we are deluded into believing is the envy of the world. The string of failures - IT procurement disasters, asylum backlogs, lost computer files, spending over-runs - almost certainly reflects the fact that the service's higher ranks will increasingly be staffed by those who have passed through the education process since the advent of dumbing down and grade inflation.

It's not helped, of course, by the generation of super-bright people lost to the City during the Nineties and Noughties.

These days, I fear, you are no more likely to find Sir Humphrey Appleby running a large department than you are to find Captain Mainwaring running a bank branch.

2) Once again, doctor...

AN excellent piece can be found on the ghastly bossy Tory MP (and doctor, obviously) Sarah Wollaston at The Spectator magazine's Coffee House blog by clicking here

IN the real Speccie (i.e. the one printed on paper and sold in shops) Charles Moore has a nice item on the closure of his old village school, Mountfield and Whatlington (C of E) Primary, between Robertsbridge and Battle. Like the great man, I grew up in rural East Sussex and attended a village primary school.

Where we lived, the aftermath of the Norman Conquest was still pretty evident in the playground. Children with surnames such as French, Norman and Reynard tended to have dark hair, whereas those with names such as Fletcher or Ticehurst were more likely to be fair haired.

That was exuberant diversity, 1970-style. Normans. And Saxons.

Thanks again for reading and enjoy the weekend.

dan.atkinson@live.co.uk

Going South: Why Britain Will Have A Third World Economy By 2014, by Larry Elliott and Dan Atkinson is published by Palgrave Macmillan

Share this article:

12 July 2013 9:47 PM

ON January 4 1642, Charles I turned up in Parliament to arrest five MPs whom he believed to be plotting against him. Forewarned, they had very sensibly high-tailed it prior to the King's arrival.

The monarch's six-word reaction was to become famous: 'I see the birds have flown.'

This quotation comes to mind whenever I contemplate what I think of as 'the elsewhere effect'. Put simply, I suspect a very large amount of economic activity is happening out of sight, and no I am not talking about the black economy, tax evasion, moonlighting or working while claiming benefits, although there is plenty of these sorts of things going on as well and they do overlap with the phenomenon I mention.

Regulation, legal prohibitions, the impossibility of getting insurance cover, the dangers of litigation - all these and allied developments have, I would guess, simply displaced activities to a place beyond their reach.

Here are some examples. The smoking ban seems to have coincided with a boom in 'pop-up restaurants', often in private homes. There's a surprise. The treatment of open solicitations for investment in private companies as comparable with the marketing of shares and unit trusts has been accompanied by increasing emphasis on 'business angels', some of them on television.

Corporate governance requirements and other regulations have reduced the attractiveness of the limited-company model in comparison with partnerships or syndicates of individuals.

What this all adds up to is, as I have noted before, what Professor Ian Angell of the London School of Economics has called a shift from 'communities of law' to 'communities of trust', from open economic activity among people who do not need to know each other to closed-circuit activity among tightly-knit groups of people who are very well acquainted.

1) Existence and non-existence

THIS 'elsewhere' principle applies well beyond economics. Would you be surprised to learn that the 'real' secret services are not the bureaucratised, equal-opportunities, office-block dwelling organisations with which we have become familiar since the end of the Cold War but shadowy outfits that, like MI5 and MI6 in the old days, officially do not exist? I wouldn't.

Nor would I be shocked to learn that British Ministers were increasingly relying on mercenaries to carry out bespoke military operations abroad rather than risk being sued by their own regular troops should something go wrong.

I don't believe important decisions are made at meetings of David Cameron's ludicrously unwieldy Cabinet, nor at 'scoping discussions' (or whatever is the vogue phrase) of civil servants.

And no, I don't believe any truly vital official information is entrusted to any publicly-available document.

2) The plausible young men (continued)

I had been going to write that the notion of the 'elsewhere effect' would be anathema to Ed Miliband, the Opposition leader. In his policy-wonk world, laws are passed and everyone complies. If the law says that Cabinet meetings should be televised, for example, so be it - there is no effect on the behaviour of the participants.

Ditto everything else, from smoking bans to money-laundering regulations. But why pick on him? Miliband is simply one of a gaggle of plausible young men (Cameron, Clegg, Osborne etc) who think much the same way. Along with a touching faith in administrative solutions to society's ills, they cling with grim determination to the Tony Blair formula that tried to close down discussion of matters of principle by insisting that 'nobody' was interested, and that 'real people' wanted politicians instead to empathise with the mundane problems of life.

Hence Cameron talking to his party conference in October 2006: 'While parents worried about childcare, getting the kids to school, balancing work and family life - we were banging on about Europe.'

For a start, 'getting the kids to school' is not something with which politicians can be of much help, 'balancing work and family life' is susceptible to political intervention only by either increasing business costs or worsening the work experience of those without families, and politicians' soothing of worries about childcare is a matter of getting non-parents to subsidise parents.

3) The day before yesterday

I caught up with my old friend Alwyn Turner earlier this week and we chatted about his new book A Classless Society: Britain in the 1990s, to be published by Aurum later this year.

It occurred to me afterwards that memory plays tricks and that a lot of people will 'recall' the Nineties as I initially did, as a time of gadgetry, Britpop, Britart, Tony Blair (landslide victory), the Millennium Bug, Tony Blair (response to the death of Princess Diana), the Millennium Dome....that's it.

In fact, of course, Blair was a phenomenon of the second half of the decade and his election was within three years of its end. The dominant British political figure was John Major (now Sir John), who served as Prime Minister from 1990 to 1997.

Similarly, the gadgetry was a late-Nineties feature - mobile phones were relatively expensive throughout the decade, and most people managed without e-mail for most of the Nineties.

It was a time of successful wars (in contrast to today): the Gulf War, Bosnia, Kosovo. A time also of scorching summers - 1990, 1995, 1997. Economic crises were far away, in places such as Thailand and South Korea. Everyone, we were told, agreed about everything: free trade, privatisation, sound money.

Personal snapshots include sitting in a pub behind The Guardian on a sweltering night in August 1990 as a breathless colleague burst in and told us: 'You'd better come back to the office - the Yanks have gone into Saudi Arabia.'

Operation Desert Shield had started.

Then there was sitting in an estate agent's car on a drizzly day in April 1998 as I sought somewhere for us to live in the country. My wife and children had caringly de-camped on holiday to the Republic of Ireland leaving me with instructions to find a buyer for our London flat and a new family home. Amazingly I managed to do both.

Millennium Eve was low key; we made chilli and listened to Frank Sinatra. That was the end of the century, as The Ramones had put it, albeit somewhat prematurely.

One last Nineties memory: a Saturday evening in The Bloomsbury Tavern, watching the first ever National Lottery draw with none other than the author himself.

Thanks for reading and enjoy the weekend.

dan.atkinson@live.co.uk

Going South: Why Britain Will Have A Third World Economy By 2014, by Larry Elliott and Dan Atkinson is published by Palgrave Macmillan

Share this article:

06 July 2013 11:46 AM

IT has been some years since The Sun newspaper entertained us all with its cut-out-and-keep guides on 'how to spot a lefty'. From memory, there were a couple of hot button issues on which however hard said lefties tried to look 'normal' they would explode in righteous rage.

One, I think, was the making of lascivious remarks about women and the other was any favourable mention of British counter-insurgency operations in Northern Ireland.

Thus to unmask the 'stealth lefty', all that was needed was a quick blast of 'cor, take a look at that' (or similar) or an appreciative reference to our brave boys across the water.

In the last few days, I have come across some prize examples of what may be called the 'hippy right'. This label (possibly invented by me) distinguishes them from the hippy left of fond memory, although in truth they overlap a fair bit.

Day to day, the hippy right-ist can pass as a fairly mainstream believer in free-market economics. But there are tried and trusted ways of enticing him to give himself away.

One is to praise central banks. Another is to speak favourably of tax collection. Fundamentally (very fundamentally) the hippy right sees both central banking and taxation as barely legitimate activities, carried out by 'the man', if not actually 'the pigs'. In the Rosseau-esque fantasy world of the hippy right, 'the asset' (money, land, shares) exists happily in a state of nature and then along come State officials to 'distort' it with taxation and regulation.

This is, of course, a million miles away from traditional conservatism. We did not, wrote Lord Hailsham, 'concede that the curse of Adam was so easily removed by Adam Smith'.

No, quite.

1) Fighters or quitters?

HERE'S a thought experiment. It is June 1970 and Labour has just lost office after a General Election. So far, so historically accurate. Now let's depart from the facts.

The party leader, Harold Wilson, resigns, the Foreign Secretary Michael Stewart contests the leadership, loses and heads off to run a charity in America, the Home Secretary James Callaghan stands aside from front-line politics for personal reasons, Defence Secretary Denis Healey returns to the back benches and says he will not stand for Parliament again and the respected Chancellor Roy Jenkins is pretty much told he will not be wanted on the Opposition front bench. Instead, he is despatched with the good wishes of the Tory premier Edward Heath to his native Wales to combat the appeal of the nationalist party Plaid Cymru.

The Opposition team features, as leader, the former fuel and power minister Roy Mason, as shadow home secretary the former Employment Secretary Barbara Castle, as shadow chancellor the former Education Secretary Edward Short and as shadow defence secretary the former Scottish Secretary Willie Ross.

That is pretty much a direct read-cross from what has happened to Labour's top front-bench team since the May 2010. Of course, it didn't happen back then. With one or two exceptions, such as Richard Crossman (who left the front bench to become editor of the New Statesman), Wilson's people went into Opposition and slogged away until they were returned to office in February 1974.

Three things stand out. First, the fantasy shadow cabinet of 1970 is not actually that bad. In real life, Mason went on to become an effective Northern Ireland Secretary, Short became Leader of the House and Mrs Castle, who went on to run the monster Department of Health and Social Security, has always had a big fan club. Ross returned to office in 1974 in his old job at the Scottish Office, and did it pretty well, apparently.

Second, all that said, the clear-out would have been spectacular: Wilson, Callaghan (a future Prime Minister), Jenkins (Home Office again - his job before the Treasury - European Commission, SDP, lots of books) and Healey (future Chancellor). Yet this is precisely the scale of the change at the top of Labour.

Third, when did politicians start going off in a huff after an adverse verdict from the electorate? Wilson and Heath were the last two party leaders who went from Opposition to Number 10 to Opposition again and (in the former case) to Number 10 once more.

2) On third thoughts...

WHAT fun it is to watch the financial media commentariat try to stay one step ahead of the game regarding Mark Carney, the new Governor of the Bank of England. Once his surprise appointment was confirmed, it was the done thing to hail him as a genius. Then, for the fleet of foot, the expression of doubts became de rigueur. By May, the consensus had it that Mr Carney could not possibly live up to the crazy expectations that had been ramped up (by whom, I wonder?).

Then, as the greatest living Canadian (apart from Joni Mitchell) started work at Threadneedle Street on July 1, it was once more OK to declare him simply marvellous.

At least the old-style music press built up a star and then knocked him down once only. Not seriatim.

3) C'est cet homme encore!

AMONG the many decent pieces in this week's edition of The Spectator is one on the political comeback of Nicolas Sarkozy by Philip Delves Broughton. Once thought pretty hopeless, comparison with his successor Francois Hollande has apparently burnished Sarko's image to Napoleonic proportions.

Here's a taster. The French right has agreed to stage US-style primaries to pick their candidate for the 2017 election. 'Sarkozy regards this as completely wet. The true Gaullist doesn't earn his party leadership in debate contests with a bunch of political pygmies. Victory should look like Austerlitz, not The X Factor.'

Marvellous stuff. Your local library ought to have a copy should you be short of the Speccie's 70-shilling cover price (hope you liked the pre-decimal reference, fellas).

Thanks for reading and enjoy the weekend.

Going South: Why Britain Will Have A Third World Economy By 2014, by Larry Elliott and Dan Atkinson is published by Palgrave Macmillan